The definition of Multinational Corporation is hard to explain but in easy words is when a company sells its goods and services in more than one country is recognized as a Multinational Corporation (MNC). The impacts of Multinational Corporations can be negative and positive. But in today’s assignment I am going to talk about Chinese cultures impact on Multinational Corporations.
Since 1970s, the multinational corporations in China has changed dramatically when the nation opened its economy and welcomed the direct investment. During the 1980s, MNCs like Motorola, Philips and NEC was welcomed in China with open arms. They used to pay half of the imposed tax rate from the local companies, and also they pay no duties on their goods imports. However, in the beginning of 2000, when per capita GDP went above UD$1,000 and when China joined the World Trade Organization, the consumers and the Chinese government changed their perceptions of MNCs drastically. Multinational Corporations main goal was to fit national interests. Then because of the National cultures impact, MNCs started to follow this rule “Think local and act global”. Chinese consumers have also become more demanding and as a result they don’t really see the difference between products which are made by the MNCs or Chinese companies. For example in 1977 there were 1 million cars in China, by 2008 there were 51 million and now there are 85 million cars in China. Every day that number increase by 38 thousand. Which means somebody buys a new car in China every 2.3 seconds. Because of this Chinese and MNCs car factories are running at light speed. In 2012 the whole of Europe combined produced 16.9 million vehicles, and China all on its own produce 1.3 million more than that. Also a car brand Audi now making long wheel based version specifically to sale in China and no where else, because in China space in the back